Yesterday, the Milwaukee Journal Sentinel ran an article on the failures of the Cigarette Tax. Even though, this article is very late in coming, later than the state budget, they bring up some very valid points.
A Cigarette Tax does not work in any long term budget. It never has worked, it never will work.
This is not rocket science, it involves very simple math.
If you raise the cigarette tax, people quit smoking.
Wisconin currently makes 77 cents for every single pack of cigarettes sold in Wisconsin, when they jack it up to $1.77 then people will quit.
In Iowa, when they raised their cigarette tax by $1 a pack, sales dropped by 30% in the first three months alone.
In Iowa, cigarette sales fell 30% in the first three months after its tax rose by $1, from 36 cents to $1.36. In Michigan, sales fell 19% - from 695.8 million packs to 563.4 million packs - over a three-year period after the tax was raised from $1.25 to $2 a pack. Michigan's cigarette tax collections rose after that tax increase, but then leveled off and actually dropped.
When this happens in Wisconsin, not only does the government not make the $1 they projected, but now they have lost the 77 cents they were originally collecting from smokers.
To fund any kind of long term projects by using a cigarette tax has proven to be one of government's biggest failures. The cigarette tax cannot be sustained for any long period of time. Clearly smokers are willing to pay 77 cents a pack now, instead of using the tax they are currently collecting, the government has over-reached because they got greedy.
Governor Doyle's intention on raising the cigarette tax is to fund expanded Badger Care coverage. This is a long term program that is doomed for financial poverty because the cigarette tax increase cannot fund this program in the long term.
Basically, Badger Care will be looking for more tax increases in the very near future because the cigarette tax cannot sustain it.
Once again, this is not rocket science. The cigarette tax has proven to be a failure in state after state after state.
Look at New Jersey- they now have a budget hole of over $150 million hole in their budget after just one year, because they jacked the cigarette tax so high that people quit or they bought their cigarettes someplace else. The revenue generated from cigarette taxes in 2006 was $640 million, in 2007 it will be about $490 million.
Where will the New Jersey government turn to fill the $150 million hole?
You got it!
They will head straight to the taxpayers in a panic.
This is a failure that anyone will half a brain should have seen coming.
Mark my words, in a few short years, Governor Doyle will be running to the taxpayers of Wisconsin in a panic, stating that the sky is falling. Tiny babies will not get the health care they need because Badger Care is collapsing. Don't let the babies die, because you don't want your taxes raised! Save the Children!
Governor Doyle and all those that voted for a cigarette tax have doomed the state of Wisconsin to fail.
It will be the taxpayers of Wisconsin that will once again have to bail the state out.
It's not rocket science people, it is just simple math.